Author: Gus Anderson

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8 proven ways to reduce overtime & labor costs (2025)

painting of a bartender with a large clock behind him

Summary

  • Unnecessary overtime and an increase in labor cost can be caused by several factors, one of which is the lack of an efficient HR and payroll system.

  • Overtime is not inherently bad, but if it becomes excessive, it can affect your bottom line and cause employee burnout.

  • The right software can curb labor cost increases without sacrificing operations and employee satisfaction.

Labor costs and overtime take up a significant portion of business expenses. While extended work hours are occasionally necessary, they can quickly become a burden if they occur too often and strain your finances.

But what causes unnecessary overtime and increase in labor costs? Common culprits include failure to anticipate demand, antiquated HR and workforce management systems, and the lack of real-time operational visibility. These issues not only impact your bottom line but can also harm employee engagement and disrupt work-life balance.

So, how do you reduce labor costs and overtime without sacrificing operations and employee well-being? Here are eight practical ways Workforce.com can help you achieve just that.

1. Forecast labor demand.

An effective cost reduction strategy is to anticipate demand. Sure, no one knows what exactly will happen on the next business day or week, but having an estimate based on relevant data points can give you a good idea of staffing needed per shift. 

Workforce.com can forecast labor demand by analyzing indicators such as weather, foot traffic, historical sales, economic trends, events, holidays, booked appointments, and other relevant factors. With these insights, you can better anticipate demand for a given period, reducing the risks of overstaffing.

Starbucks Australia is one of the organizations that experienced lower labor costs when they started using Workforce.com. Because they have many store locations, anticipating demand was challenging since each store is different. However, with Workforce.com, they can create labor-efficient schedules based on demand up to four weeks in advance, ensuring the right amount of staff is always scheduled for the right number of customers.  

2. Quickly fill vacant shifts due to no-shows or last-minute absences.

No-shows or last-minute absences are inevitable in managing a team, but how they affect your operation and labor costs will depend on how effectively you address them.

When an employee notifies you that they can’t work a shift at the last minute, you must quickly cover the vacant shift. Otherwise, you may need to rely on overtime, driving up labor costs unnecessarily.

Workforce.com equips frontline managers to offer a vacant shift to other qualified team members. Case in point: The Winnipeg Jets. Before using Workforce.com, they had difficulty managing no-shows, especially when they experienced 80 replacements in a week, and there was no centralized way of managing these swaps. Using Workforce.com, managers can offer vacant shifts and fill them quickly, all in one platform, without calls, emails, or texts. 

“With Workforce.com, switching shifts is so much easier. I don’t know anyone who’s not using it,” says Kristin LaCroix, TrueNorth’s Director of Technology Services. “Everyone got on board with it pretty quickly.”

3. See labor costs in real-time when creating schedules.

Staying on top of labor costs means understanding your expenses before they’re incurred. Workforce.com offers that visibility. 

When scheduling or creating shifts, Workforce.com displays wage costs in real time, enabling managers to keep staffing levels aligned with labor budget allocations and customer demand.

“We know for each shift, what its cost is without having to crunch any numbers on a spreadsheet,” says Troy Persad, General Manager at Bridge Control Services. When building schedules, every shift tile displays wage costs, which he uses to optimize shifts according to the budget and crew’s needs.

The same goes for The Winnipeg Jets, “Workforce.com is preparing us to become a little bit more strategic in how we schedule,” shares LaCroix. “It helps us move staff to different times if we see inefficiencies, helping us provide a better experience to our guests.”

Workforce.com plays a massive role in helping you schedule in a way that keeps overtime costs low. Scheduling software tracks work hours and unavailability, automatically suggesting the most cost-effective people for coverage while avoiding unnecessary overtime. It lets you see wage costs for every shift, so you’ll always know how much your business spends on labor in real time.

This kind of automation reduces the overtime errors that come with scheduling via spreadsheets. For instance, Workforce.com will alert managers whenever they try to schedule a shift that will cause an employee to dip into overtime. It also keeps track of maximum work hours and prevents managers from scheduling employees for more than is legally allowed, depending on your state.

4. Track employee hours and overtime down to the minute.

Workforce.com’s time and attendance management software helps you track, manage, and calculate overtime and labor expenses. It alerts your frontline managers whenever an employee hits overtime and automatically records overtime hours and time and a half pay on digital timesheets. These timesheets display scheduled vs. actual hours and labor cost variances, making it easy to pinpoint where and when you are spending too much on overtime.

“There was no real way with our old system to compare variance,” says Kayleen Nemanishen, a configuration analyst for Ranch Ehrlo Society. “With Workforce.com, it’s super apparent – if somebody works 30 minutes longer than scheduled, it shows right on their timesheet.”

More importantly, automated employee time tracking helps you avoid tricky situations where employees claim to have worked more overtime than you have on record. By default, the Department of Labor assumes that the employee is right about the number of overtime hours they worked unless the business owner can provide proof otherwise.

With timesheets recorded daily, you avoid time reporting disputes, protect your business from paying out overtime that was never actually worked, and stay compliant with labor laws. This increases accountability and ensures your overtime tracking is airtight, helping you avoid costly DOL fines and employee lawsuits.

5. Set a labor budget.

Set a cap on an amount or the number of hours you can allocate every day to meet demand for every day, week, or month. This is all about finding the right balance between supporting your employees and improving your bottom line. Setting hard limits on hours worked encourages managers and employees to adapt and become more efficient with navigating overtime. 

On Workforce.com, you can set labor budgets and track schedules and shifts against your set allocation. You can set and plan labor budgets by location or department. Budgets can be shown either in hours or wages.

Of course, setting limits doesn’t disqualify you from paying overtime worked beyond them. The law stipulates that any time over 40 hours has to be paid as overtime. So, if someone has exceeded your overtime budget, ensure you have an accurate way of recording, calculating, and alerting managers to all overtime pay owed. 

6. Offer flexibility with sending schedules in advance.

Flexibility is different for hourly workers. For them, it’s about knowing their shifts well in advance so they can plan other areas of their lives, such as childcare, medical appointments, or PTO. But is scheduling shifts far in advance always productive?

The answer is yes—if done correctly, Workforce.com can help you schedule in advance because it can predict demand and create shifts quickly. You can even create reusable shift templates for consistent schedules, streamlining the process week after week.

Publishing schedules in advance reduces no-shows and last-minute absences and helps control labor costs by minimizing disruptions. Additionally, it ensures compliance with predictive scheduling or Fair Workweek laws in cities where these regulations apply, protecting your business from potential fines.

7. Equip your team with the right labor tracking tools.

Unnecessary labor costs often stem from minor errors or administrative oversights, such as missed log-ins or accidentally scheduling employees beyond their allowed hours. These mistakes are easy to overlook, mainly when relying on manual processes or inefficient systems.

Workforce.com streamline time-consuming administrative tasks and reducing the errors associated with manual input. The Amenity Collective saw a drastic drop in time spent on admin work since implementing Workforce.com in their organization—from 20 hours a week to just 3 hours. 

“With Workforce.com, we’ve been able to reduce the time our staffers spend publishing schedules by 85% – that is a huge efficiency gain for our organization and for our employees,” says Adam Chen, CIO of the Amenity Collective. “What that allows our employees to do is spend more time building stronger relationships.”

Workforce.com offers a real-time view of what’s happening in every shift. It shows who clocked in, who’s running late, and who’s about to go into overtime. HR and operational data can be accessed anytime—no need to wait for month-end reports. 

In addition, Workforce.com has a powerful employee self-service system that enables staff to clock in and out easily, view their work schedules, get notified for open shifts, request leaves, and update their information. These tools lighten the administrative workload and reduce errors and inaccuracies. 

8. Cross-train to bolster your workforce.

If only a few of your team members can carry out specific tasks, you’ll end up in a situation where the same few people get overtime. This can lead to employee turnover , as excessive overtime disrupts work-life balance. At the same time, it can dampen employee morale as staff who aren’t offered overtime opportunities may feel unfairly treated, missing out on the extra pay.

The solution? Conduct cross-training programs for different roles. This way, you can fill vacant shifts with a larger pool of qualified employees. Cross-trained employees not only help you avoid scheduling unnecessary overtime but also allow you to divvy overtime in a fairer manner if needed.

Workforce.com’s performance management system makes this process more efficient. It lets you track employee progress and development, identify their strengths, and provide targeted training to expand their skill sets.

Stay on top of labor costs and overtime with Workforce.com

Running a cost-effective operation starts with the right tools. Manual processes increase the risk of unnecessary overtime costs and waste valuable time on tasks that could be completed in minutes with a more efficient system.

Workforce.com has a comprehensive suite of solutions to help you stay on top of your labor budgets, reduce overtime, and simplify payroll processing. Want to see what else Workforce.com can do for your business? Book a call today.

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Shift Differential Pay: How to Calculate + Implement (2025)

Summary

  • Shift differential pay is additional compensation for staff who work hours outside of their regular schedule.

  • Shift differential pay becomes challenging to navigate once government-mandated overtime pay and varying schedules come into play.

  • Payroll software can automate calculations for shift differential pay along with overtime, payroll taxes, and other withholdings.

Operations that run 24/7, 365 days a year, face the unique challenge of ensuring they have people working around the clock, especially during odd hours. This is where shift differential pay comes into play, where employers pay their staff variable rates based on the type of shift they work.

Shift differential pay may seem straightforward initially, but it can get quite complicated. Here’s a rundown of things you need to know about shift differential pay, plus tips on making your shift differential policy effective.

What is shift differential pay, and how does it work?

Shift differential pay is additional pay for working less desirable shifts, such as graveyard shifts, weekend shifts, or holidays. This is typical for shift-based businesses and industries that operate round the clock, such as customer support centers, manufacturing, healthcare, and security.

Businesses that need to extend operations due to peak seasons may also offer shift differential pay to employees who must come in after typical work hours or during holidays.

Shift differential pay is a type of premium pay that’s not mandated by law, but it’s a good way to incentivize employees to pick up shifts outside their typical schedule or comfort level. It can also help curb turnover rates, especially among shift-based organizations.

Calculating shift differential pay

Companies decide how much shift differential pay to offer. But, again, this is just a perk and optional. So, the amount and implementation will be up to your discretion. Sometimes, the rate can even be up for negotiation between you and your employees. Whatever the rate, remember that the goal is to encourage your employees to be more receptive to working odd hours.

Shift differential rates are assigned in different ways. Here are some of the common options and sample computations:

A set rate per hour

Scenario: Employees who work the third shift earn $15 more per hour.

  • Base hourly rate: $7.25/hour
  • Shift differential rate: $15/hour
  • Hours worked: 8 hours

Sample computation:

  1. Add the base hourly rate to the shift differential rate:
    7.25 + 15 = 22.25 (hourly rate including shift differential)
  2. Multiply by the hours worked:
    Total Pay = 22.25 × 8 = 178

Result: The total pay for the 8-hour shift is $158.

A percentage of regular hourly pay

Scenario: Employees earn an additional 10% of their regular hourly rate for night shifts.

  • Base hourly rate: $7.25/hour
  • Shift differential rate: 10% of hourly rate
  • Hours worked: 8 hours

Sample computation: 

  1. Calculate the percentage increase by multiplying the base rate by 10%.
    7.25 x 0.10 = 0.725
  2. Add the shift differential rate to the base rate:
    7.25+0.725 = 7.975 (hourly rate including shift differential)
  3. Multiply by the hours worked.
    7.975 x 8 = 63.80

Result: The total pay for the 8-hour shift is $63.80

Is shift differential pay the same as time and a half-pay?

No, because time and a half pay is mandated by law for non-exempt employees whenever they incur overtime hours in a day or week. It’s called time and a half pay because the overtime rate is calculated by 1.5 times an employee’s hourly wage. On the other hand, shift differential pay is simply an incentive for workers to work undesirable shifts or days and is not mandated by law.

Also read: What is time and a half + how to calculate it

Factors such as wages and work responsibilities affect an employee’s eligibility for overtime under the Fair Labor Standards Act (FLSA); this means that even some salaried employees are entitled to overtime pay. With this in mind, it’s essential to consider how overtime can affect shift differential pay decisions and calculations. 

Shift differential should be included in the computation of the regular rate of pay when calculating overtime.

Tips for Implementing Shift Differential Pay Effectively

While shift differential pay can improve employee retention and help ensure coverage, it’s not just about assigning a dollar amount to unconventional hours. You need to be strategic in the way you deploy this kind of policy. Here are some helpful tips. 

Be intentional when setting differential pay rates

As the employer, you decide how much shift differential pay will be. So how do you figure out the best rate? Here’s how you can approach it:

Consider the hours and shifts you’re covering. Let’s say you have an operation that runs 24/7, and you have this schedule:

  • 8 AM to 4 PM (Day Shift)
  • 4 PM to 12 AM (Second Shift)
  • 12 AM to 8 AM (Third Shift)

Assigning a shift differential rate for the second and third shifts would make sense, because those hours are odd and less desirable compared to the day shift.

Aside from unusual hours, look at holidays or peak seasons too. Working during these days can sacrifice rest and family time, so the rate should acknowledge the work they do and the personal time they give up.

Another approach is to look at roles and responsibilities. Is the shift differential the same for all positions? Do specific roles deserve more? If some jobs entail heavier workloads or responsibilities, consider offering a higher differential to make those roles and shifts more appealing. While assigning a single, uniform rate is more straightforward, giving a higher incentive for functions that take on more responsibility may be more attractive to employees.

Use technology

So you’ve decided to incentivize employees with shift differential pay. Great. Now, how are you going to calculate it efficiently? 

Sure, it’s straightforward to calculate shift differentials when, say, “John” works the graveyard shift for an entire pay run, and that’s it. Whether you pay a bonus amount or a multiple of John’s standard rate, this is a fairly easy calculation. 

But what if John works variable shifts across multiple teams during this period? What if he worked the first shift on some days and the second on certain days? And on top of that, he worked for more than 40 hours and is entitled to time and a half pay on top of the differential pay? Now, imagine you have 50 different Johns. This is where things get tricky.  

It would be best to have software to do all the work for you. Workforce.com can help you manage shift differentials along with other areas of human resources management. Here’s how:

  • Accurate time and attendance – Proactively getting timesheets right is essential to paying employees correctly and on time. The more edits you need to make retroactively, the more chances there are for errors, further complicating differential pay. Workforce.com’s automated system efficiently captures time punches, generates timesheets, and runs payroll with as little manual data entry as possible. 
  • Comprehensive team structure – Workforce.com enables you to sort staff into specific teams to differentiate what kind of work qualifies for differential pay. With properly designated teams, it’s easy to automatically apply differential pay to front-of-house staff as opposed to, say, back-of-house.
  • Classification tags – In Workforce.com’s system, you can tag employees based on classifications like seniority and experience. This offers more flexibility in distributing differential pay to staff than something as simple as teams.
  • A strong labor compliance engine – Workforce.com automates compliance with federal and state-based wage and hour laws, which is necessary for any organization, especially for implementing shift differential pay. It gives you a paper trail in case of an audit and prevents instances of incorrect pay computation.
  • A robust payroll system – A common challenge is finding a system that only requires a little configuration from the IT team. Go for a system that automatically assigns your pay rules and identifies eligible employees. All the better if you go for payroll software housed in the same ecosystem as time tracking and a labor compliance engine. 

Communicate the policy and make it accessible

It’s all about transparency. You need to inform your employees that shift differential pay is offered for working specific shifts and that a policy states the rate and eligibility.

Train your managers to know the ins and outs of shift differential pay, so they can quickly clarify when staff has questions about it. It’s also essential to include the policy in the employee handbook and make it accessible to everyone so that they can refer to it when needed. A good employee self-service system can do this. 

Gather feedback and incorporate it with your employee retention plan

Money can solve most problems, but not the lack of employee engagement. Compensation is a crucial element, but it doesn’t mean that you simply throw money at the problem, hoping to make operational issues disappear.

Shift differential pay will only be effective if employees find it valuable. Aside from time, consider potential hurdles staff must face when working odd hours or days. Think about extra spending on their end for transportation or babysitting if they need somebody to stay with their kids while they work nights or holidays. With this insight, you’re more equipped to improve your shift differential pay policy. 

Furthermore, a shift differential policy only supplements an overall employee retention program. It’s vital but not the end-all and be-all of keeping employees engaged. Aside from this incentive, it’s best to have a good feedback system, training opportunities, flexibility, and recognition programs.

Optimize labor with data

Shift differential pay may be an added expense, but it can still be cost-effective. The key is properly forecasting your staffing needs to avoid instances where you need to offer differential pay incentives due to under- or overstaffing.

Workforce.com’s labor forecasting system looks at historical data, weather, booked appointments, seasonal trends, foot traffic, and much more to get a picture of how much demand you can expect every day for every shift.

The key to paying your employees right

At the end of the day, it’s all about compensating your employees correctly. The best way to ensure accuracy is error-free timekeeping and payroll processing.

Workforce.com’s time and attendance platform is specialized for shift-based industries. It records clock-ins and clock-outs accurately, and automatically generates timesheets. Employees in the field can also clock in and out via their mobile devices, ensuring time spent on work is recorded correctly.

Aside from accuracy, Workforce.com is also compliant and can apply multiple pay rates, including shift differential pay. So you can rest assured that once timesheets are pushed to payroll, your staff will receive accurate and compliant pay.

Discover how Workforce.com helped organizations manage time and attendance, employee scheduling, and payroll. Book a demo today.

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Your guide to tipping laws by state (2025)

Astronaut Grabbing a Tip Jar

Summary

  • Tipping laws vary by state, and HR professionals need to navigate the specific requirements to ensure compliance. — More

  • Employers can choose from different tip policies, such as tip splitting, tip sharing, or tip pooling, to establish the fair distribution of tips among employees.

  • Payroll software streamlines tip calculations, simplifying the process for employers and ensuring accurate and fair tip distribution.

In the United States, tipping has become deeply ingrained in our culture, more so than in many other countries. Michael Lynn, a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration, told NBC the US is “the most tip-happy country.” In many other countries, leaving a small tip is optional and extra, but tipping in the US holds a far more substantial role. The livelihood of employees in certain sectors depends on gratuities as they are baked into their hourly wages.

For HR professionals, managing a workforce in a tipped industry presents unique challenges. Ensuring compliance with the specific laws governing how these employees should be paid is a delicate task. Understanding the intricacies of tipping laws is crucial to avoiding potential legal pitfalls and ensuring fair compensation for employees.

Adding to the complexity is the interaction of tipping with overtime regulations. Determining the proper calculation of overtime pay for tipped employees requires a nuanced understanding of the rules and regulations. Failure to comply with these guidelines can result in costly legal consequences for businesses.

This guide will break down all federal and state tipping laws to help you navigate the intricate landscape of gratuity regulations. 

Click here to jump to a table outlining each state’s minimum wage laws for tipped employees.

What is the US tipping law?

According to the IRS, tips are discretionary payments made by customers to employees. This includes cash tips received directly, tips left through electronic settlement or payment methods, the value of noncash tips, and tip amounts received through tip pooling or tip-sharing arrangements.

The Department of Labor (DOL) defines a tipped employee as “any employee working in an occupation in which he or she regularly receives more than $30 a month in tips.” Examples of tipped employees include servers, bartenders, hotel staff, valets, and other service-industry workers who rely on tips as a significant part of their income.

Tipped employees receive a special form of hourly wage known as a tipped wage. The tipped wage is a lower direct wage (known as “tip credit”) paid by employers to tipped employees, with the expectation that the employee’s tips will supplement their earnings and meet or exceed the federal minimum wage requirement. 

According to the DOL, federal law states that employers of tipped employees are required to pay a direct wage of $2.13 per hour as long as the combined amount of tips and the direct wage equals or exceeds the federal minimum wage. However, many states have higher direct wage requirements for tipped employees that employers must adhere to.

Consider a restaurant server who receives a direct wage of $2.13 per hour and earns an average of $20 per hour in tips. To determine compliance with the law, we calculate the total hourly earnings by adding the direct wage and tips:

Direct Wage: $2.13 per hour

Tips: $20 per hour

Total Hourly Earnings: $2.13 + $20 = $22.13

In this scenario, the server’s tips of $20 per hour ensure compliance with the law. Since the total hourly earnings ($22.13) exceed the federal minimum wage requirement, which is currently set at $7.25 per hour, the server is receiving appropriate compensation.

Tipping laws by state

While federal law sets the groundwork for tipping regulations in the United States, it is important to note that individual states have the authority to establish their own tipping laws. These state-level variations can significantly impact the requirements and practices surrounding tipping in different parts of the country.

To gain a comprehensive understanding of tipping laws in each state, we have provided detailed tables below that break down the regulations. These tables will help you navigate the specific requirements for maximum tip credits and minimum cash wages in each state.

But first, let’s define two key terms that play a crucial role in understanding tipping laws.

Maximum tip credit: The maximum tip credit refers to the amount that employers are allowed to offset the minimum wage requirement by considering the tips received by their employees. This credit can vary from state to state, and understanding the specific maximum tip credit in each jurisdiction is essential for employers and employees alike.

Minimum cash wage: The minimum cash wage represents the lowest hourly rate that employers must pay to tipped employees directly, regardless of the tips they receive. While some states align the minimum cash wage with the federal standard, others have established higher cash wage requirements to ensure fair compensation for tipped workers.

To explore the specific tipping laws in your area in more detail, click on the link provided for each state. 

State Minimum cash wage Maximum tip credit Total tipped minimum wage rate
Alabama** $2.13 $5.12 $7.25
Alaska $11.91 – $11.91
Arizona $11.70 $3.00 $14.70
Arkansas $2.63 $8.37 $11.00
California $16.50 – $16.50
Colorado $11.79 $3.02 $14.81
Connecticut***** $16.35   $16.35
Delaware $2.23 $12.27 $15.00
Florida * $9.98 $3.02 $13.00
Georgia ** $2.13 $5.12 $7.25
Hawaii *** $12.75 $1.25 $14.00
Idaho $3.35 $3.90 $7.25
Illinois $9 40% of the applicable minimum wage ($6) $14.00
Indiana $2.13 $5.12 $7.25
Iowa $4.35 40% of the applicable minimum wage ($2.90) $7.25
Kansas**** $2.13 $5.12 $7.25
Kentucky $2.13 $5.12 $7.25
Louisiana** $2.13 $5.12 $7.25
Maine $7.33 50% of the applicable minimum wage ($7.32) $14.65
Maryland $3.63 $11.37 $15
Massachusetts $6.75 $8.25 $15
Michigan 38% of the applicable minimum wage ($4.01) $6.55 $10.56
Minnesota $11.13 – $11.13
Mississippi** $2.13 $5.12 $7.25
Missouri $6.88 50% of the applicable minimum wage ($6.87) $13.75

Montana

Businesses with gross annual sales over $110,000

Businesses not covered by FLSA standards with gross annual sales of $110,000 or less

$10.55

$4

 –

$10.55

$4
Nebraska $2.13 $11.37 $13.50
Nevada**** $12 – $12
New Hampshire $3.27 $3.98 $7.25
New Jersey $5.26 $9.87 $15.49
New Mexico $3 $9 $12
New York – Maximum tip credit varies by region. Consult New York’s Minimum Wage Overview for more information. $15
North Carolina $2.13 $5.12 $7.25
North Dakota $4.86 33% of the applicable minimum wage ($2.39) $7.25
Ohio $5.35 $5.35 $10.70
Oklahoma**** $2.13 $5.12 $7.25
Oregon $14.70 – for exceptions in the Portland Metro and non-urban counties, check Oregon’s Minimum wage increase schedule – $14.70
Pennsylvania $2.83 $4.42 $7.25
Rhode Island $3.89 $11.11 $15.00
South Carolina** $2.13 $5.12 $7.25
South Dakota $5.75 50% of the applicable minimum wage ($5.75) $11.50
Tennessee** $2.13 $5.12 $7.25
Texas**** $2.13 $5.12 $7.25
Utah**** $2.13 $5.12 $7.25
Vermont $7 $7.01 $14.01
Virginia $2.13 $10.28 $12.41
Washington $16.66 – $16.66
West Virginia $2.62 70% of the applicable minimum wage ($6.13) $8.75
Wisconsin $2.33 $4.92 $7.25
Wyoming $2.13 $5.12 $7.25

*Florida — The minimum wage is scheduled to increase by $1.00 every year on September 30th until it reaches $15.00 on September 30, 2026.

**Alabama, Louisiana, Mississippi, South Carolina, and Tennessee have no state minimum wage laws. Georgia has a state minimum wage law; however, it does not extend to tipped employees. 

***Hawaii — “The combined amount the employee receives from the employer and in tips must be at least $7.00 more than the applicable minimum wage.” (Source) 

****In Kansas, Oklahoma, Texas, and Utah, employees subject to the FLSA are excluded from state minimum wage laws. Employers must ensure these employees are paid at least the federal minimum wage of $7.25 per hour.

*****In Connecticut, employers can take a tip credit for bar and hotel employees. For restaurant and hotel wait staff, employers must at least pay $6,38 and may take a maximum tip credit of $9.97. Meanwhile, they should pay at least $8.23 and can take a maximum tip credit of $8.12 for bartenders who normally receive tips.

What tipping model should my business follow?

Implementing a tip policy is an important consideration for employers as it establishes guidelines on how tips are distributed among employees and can contribute to a fair and harmonious work environment. When it comes to tip policies, there are various models that businesses can adopt, each with its own implications and considerations.

One common approach is the “everyone keeps their tips” policy, where each employee retains the tips they earn at the end of their shift. While this policy appears straightforward, it can raise concerns about fairness. In a restaurant setting, for example, only customer-facing staff, such as waitstaff and bar staff, receive tips under this policy. Essential back-of-house employees like dishwashers and bussers are left without tips. This can create a disparity, potentially leading to a shortage of back-of-house employees who do not benefit from additional tips.

Another approach is tip splitting or tip sharing, where tips are divided among both tipped and non-tipped employees based on hours worked or predetermined percentages. Tip sharing is usually voluntary, without specific legal guidelines. This policy ensures that all employees have the opportunity to receive tips, fostering a more equitable environment.

Tip splitting can be complex from a payroll perspective when calculating employee wages. Employers must ensure that non-tipped employees receive at least the minimum wage, including their share of tips (which are also subject to taxation). Additionally, the proper application of tip credits to the wages of tipped employees is crucial. It is important to maintain fairness and ensure that non-tipped employees do not out-earn their tipped counterparts due to tip credit rules.

Tip pooling is another option involving the collection of tips earned during a shift and their equitable distribution among both front-of-house and back-of-house staff. Under the Fair Labor Standards Act (FLSA), if tips are shared with non-tipped staff, employers must pay the full minimum wage without applying tip credits. While tip pooling promotes fairness by providing all employees with a consistent hourly wage and shared tips, it may not be a viable solution during slower periods when tips are scarce.

Ultimately, the tipping model your business chooses should align with your company’s values, industry standards, and the preferences of your service employees. Consider the dynamics of your workforce, the potential impact on employee morale, and the legal requirements specific to your jurisdiction when determining the most suitable tip policy for your organization.

Streamline tip calculations with Workforce.com

No matter which tipping policy you choose to adopt, handling tip calculations can be a daunting task. The good news is that Workforce.com can be a valuable ally in simplifying this process. By seamlessly integrating with your POS system, you can customize the percentage of tips to be shared via a “tip jar” feature and automatically ensure that your employees receive their rightful earnings based on their hours worked. 

If you’re interested in discovering how proper time and attendance tracking and payroll processing can revolutionize your tip management, reach out to us today. We’d be delighted to guide you through the process.

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.

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Paid Sick Leave Laws: State by State (2025)

Summary

  • There is no federally mandated paid sick leave law. 

  • The Family and Medical Leave Act (FMLA) may allow eligible employees to take up to 12 weeks of unpaid leave for certain health-related situations.

  • More than 20 states have implemented their own paid sick leave laws – see them here 

Paid sick leave refers to time off that workers can use if they are sick, injured, or require medical care. It can also be used when an employee needs to attend to a family member or loved one for medical reasons, including elder care or child care. Paid sick time also covers mental health and preventative care.

Some sick leave policies also cover leave when an employee or their loved one is a victim of sexual assault or domestic violence.

Different countries around the world have varying laws and policies surrounding paid sick leave, including the number of days allocated to an employee every calendar year, whether they can carry over an accrual of unused sick leave, and differences in entitlement between full-time and part-time workers. 

What federal law says about paid sick leave

The United States is the only nation with an advanced economy that does not offer its workers federally mandated paid sick leave. 

Although there are no requirements for regular paid leave at the federal level, there are rules that allow employees to take unpaid leave under certain circumstances. The Family and Medical Leave Act (FMLA) states that eligible employees can take up to 12 weeks of unpaid leave. This is used for “certain medical situations for either the employee or a member of the employee’s immediate family.”

Eligible employees are those who have worked with their current employer for at least a year and have done a minimum of 1,250 hours of work in the last 12 months. 

But that doesn’t mean Americans go without any sick leave benefits. According to the Bureau of Labor Statistics, 79% of US workers in the private sector had access to paid sick leave in March 2022. This figure varies depending on the industry, and, in fact, 54% of people working in the leisure and hospitality sector have paid sick time.  

As an employer or HR executive, you must first be aware if your state requires you to offer paid sick leave and under what conditions. If you’re not bound by law, sick leave is still something worth considering for the sake of your employees’ physical and mental well-being. 

Paid sick leave laws by state

Research shows that an average person works 10.5 days in a year while not feeling well and 47% said that they’d “power through” instead of taking a sick day.

This has led some states to implement their own sick time laws. Companies that fall outside of those states also have the option to implement their own policies. 

There are currently 22 states, including Washington D.C., that have paid sick time laws. Click on your state to get a brief overview of what you need to know:

Alaska

Arizona

California

Colorado

Connecticut

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Nevada

Nebraska

New Jersey

New Mexico

New York

Oregon

Rhode Island

Vermont

Virginia

Washington

Washington D.C.

Alaska

Starting July 1, 2025, Alaska’s paid sick leave law will take effect.

Employers with 15 or more employees: One hour of paid sick leave for every 30 hours worked. However, employees are only allowed to use 56 or less hours in paid sick leave per year, unless the employer sets a higher limit. Employees with fewer than 15 employees can limit annual sick leave usage to 40 hours.

Arizona

Every employer, regardless of size or industry, must offer paid sick time to employees. Accrual rates are as follows:

  • Employers with 15 or more employees: One hour of earned paid sick time for every 30 hours worked. Employees are not entitled to accrue or use more than 40 hours of earned paid sick time per year unless a higher limit is set.
  • Employers with less than 15 employees: Minimum of one hour of earned paid sick time for every 30 hours worked. Employees are not entitled to accrue or use more than 24 hours of earned paid sick time per year unless a higher limit is set.

 California

Employers are required to provide most employees with at least 40 hours or five days of PSL (Paid Sick Leave) per year. Eligible employees include full-time, part-time, and temporary workers who meet the following criteria:

  • The employee works for the same employer for a minimum of 30 days within a year.
  • 90 days of employment have elapsed before they use any paid sick leave. 

Employers can offer sick leave in one lump sum at the beginning of the year or set up an accrual plan where an employee must earn at least one hour for every 30 hours worked.

Colorado

All employers are required to provide one hour of paid sick leave for every 30 hours worked, capped at 48 hours per year. 

Sick leave may be used for any of the following:

  • Mental or physical illness or injury
  • Bereavement or death of a family member
  • Absences due to domestic abuse or sexual assault
  • Need for a medical diagnosis, treatment, or preventative care
  • The care of a family member for any of the reasons listed above
  • Evacuation or care for a family whose school or place of care was closed due to an unexpected event such as inclement weather and power/heat/water loss.

Connecticut

Effective January 1, 2025, employers with 35 or more employees must provide one hour of paid sick leave for every 30 hours worked. The employees can accumulate a maximum of 40 hours each year. 

Employers choose the 365-day period by which paid sick leaves will be calculated. For instance, it could be based on the calendar year or an employee’s work anniversary. 

Employees can carry over up to 40 hours of unused paid sick leave to the next year.

Maine

Employers with 10 or more employees must provide one hour of paid leave for every 40 hours worked, maxing out at 40 hours in a year. Workers can only use their leave after they have worked a minimum of 120 days. 

Maine’s paid leave law is unique in that it is not limited to sick time – employees can use their accrued leave for any reason, including emergency, illness, sudden necessity, planned vacation, etc.

Maryland

Employees are entitled to one hour of paid sick leave for every 30 hours worked, up to 40 hours every year. They are not allowed to use sick leave within their first 106 days of employment. 

  • 14 or fewer employees: sick leave is unpaid
  • 15 or more employees: sick leave is paid

Massachusetts

Most employees earn up to 40 hours of sick time per year. They must earn at least one hour for every 30 hours worked. 

  • 11 or more employees: sick leave is paid
  • Under 11 employees: sick leave is unpaid

Government employees and students who work for their college or university do not qualify for earned sick time. 

Michigan

According to the Earned Sick Time Act, small business employees shall get one hour of earned sick time for every 30 hours worked and can use up to 40 hours of paid earned sick time in a calendar year unless the employer sets a higher limit. 

In Michigan, an organization is considered a small business if:

  • It has 9 or fewer employees at a time. 
  • Or in the current or previous calendar year, they had 10 or more employees for no more than 19 workweeks. 
  • They have had 10 or more employees for less than 20 workweeks in a year. Once they exceed 20 workweeks with 10+ employees, they lose small business status for the rest of the year and the following year. After that, they can regain it if they meet the criteria again.

All other employers must provide a minimum of one hour paid earned sick time for every 30 hours worked. Employees can use a maximum of 72 hours paid earned sick time annually unless there’s a higher limit imposed by the employer. 

Minnesota

According to the Earned Sick and Safe Time (ESST), employees earn one hour of sick and safe time for every 30 hours work and can accrue a maximum of 48 hours each year unless the employer sets a higher limit. 

Minnesota employees who are anticipated to work at least 80 hours and are not an independent contractor are eligible for this paid leave. 

Missouri

Unless there are legal challenges, Missouri’s paid sick leave law will take effect on May 1, 2025.

Eligible employees will earn one hour of paid sick time for every 30 hours they work.

Employers with 15 or more employees can cap annual paid sick time at 56 hours. For smaller employers, the cap is 40 hours per year.

Some workers are exempt from the law, including those in educational, charitable, religious, or nonprofit roles; employees who act as foster parents (in loco parentis); employees in retail or service businesses with less than $500,000 in annual gross sales; and incarcerated individuals.

Nebraska

Nebraska’s paid sick leave law will take effect on October 1, 2025. 

Employers must offer one hour of paid sick leave for every 30 hours worked. 

Workers for an employer with fewer than 20 employees can earn up to 40 hours of paid sick leave per year. While those working in a workforce with more than 20 employees can earn up to 56 hours of paid sick leave per year. 

Nevada

Employers with 50 or more staff must provide .01923 hours of paid leave for every hour of work performed. All employees, including part-time workers, are eligible. Hours may be frontloaded instead of accrued according to the discretion of the employer. 

New Jersey

Employers of all sizes must provide up to 40 hours of sick leave per year. The accrual rate equals one hour of sick leave earned per 30 hours worked. Full and part-time employees are covered. 

The following employees are not eligible for earned sick leave:

  • People employed in the construction industry under a union contract
  • Per diem healthcare workers
  • Independent contractors
  • Independent contractors who do not meet the definition of an employee under NJ law

Employees can carry over up to 40 hours of unused sick leave into a new year; however, they cannot use more than 40 hours of sick leave during that year. 

New Mexico

The Healthy Workplaces Act requires employers to provide one hour of paid sick leave (PSL) for every 30 hours worked. Both non-exempt and exempt employees are eligible for PSL. 

While employees may accrue PSL without limit, employers can cap its usage to 64 hours per year. Unused PSL must carry over into the following year, but the annual usage cap of 64 hours still applies.

Employers have the option to front-load PSL at the beginning of the year. However, even if front-loaded, employers must continue to track accruals since the Act requires employees to accrue leave as they work. Employers cannot limit or cap accrual but can restrict the amount of PSL an employee uses annually.

New York

New York State’s paid sick leave laws came into effect on April 3, 2020. Private employers with five or more workers and a net income of more than $1 million have to provide paid sick leave. Employers with fewer than five workers and up to $1 million net income have to provide unpaid sick leave. Employees accrue leave at a rate of one hour for every 30 hours worked. 

Federal, state, and local government employees are not covered by this law.

Employees can make use of their paid sick leave through a verbal or written request for any of the following reasons:

  • For mental or physical illness, injury, or health condition, regardless of whether it has been diagnosed or requires medical care at the time of the request for leave.*
  • For the diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; or need for medical diagnosis or preventive care.

*This includes using leave for the recovery of any side effects of the COVID-19 vaccination.”

New York State also implements safe leave laws to cover time off when an employee or their family member has been the victim of domestic violence, a family offense, sexual violence, stalking, or human trafficking. 

The time off, in this case, can be used for a number of reasons, such as to seek help from a domestic violence shelter, meet with an attorney or social services, or file a complaint with law enforcement. 

Oregon

One hour of sick time for every 30 hours worked, capped at 40 hours per year. Employees can only start using their sick time after they have worked for at least 90 days. Independent contractors do not accrue sick time. 

  • 10 or more employers: sick time is paid 
  • 6 or more employees in Portland: sick time is paid
  • Fewer than 10 employees: sick time is unpaid

Rhode Island

Most employees have the right to accrue one hour of sick leave per 35 hours worked, capped at 40 hours in a year. Government employees and certain per diem nurses do not qualify for sick leave. 

  • 18 or more employees: sick time is paid
  • 17 or fewer employees: sick time is unpaid

Vermont 

Employees earn one hour of paid sick time for every 52 hours worked. A maximum of 40 hours of sick leave can be used per year. While employees begin earning sick time as soon as they start work, employers may choose to prohibit the use of sick time for up to one year. 

People who do not qualify for sick time include:

  • Government employees
  • Per diem health facility workers
  • People employed for a job scheduled to last 20 weeks or fewer
  • Employees who fall under school district or supervisory district union policies

Virginia

Employees accrue one hour of paid sick leave for every 30 hours worked. Paid leave can be carried over to the following year. Accrual and use of paid leave is capped at 40 hours annually, unless the employer sets a higher limit. 

However, employers may choose to frontload the paid sick leave, providing employees with the full annual amount upfront rather than having it accrue over time.

Washington

Employees earn at least one hour of paid sick leave per 40 hours worked. Unused sick leave balances of 40 hours or less are carried over to the next year. Employees can only begin using sick leave after 90 days of employment. 

Employees excluded from sick leave protections:

  • “White collar” employees in executive, administrative, computer, and outside sales positions
  • Certain agricultural workers
  • State or local government employees
  • Forest protection and fire prevention workers
  • See the full list here

Seattle has its own set of complex sick leave requirements separate to the rest of the state:

  • Employers with up to 49 employees: must offer one hour of paid sick time for every 40 hours worked. Carryover may be limited to 40 hours per year.
  • Employers with 50 to 249 employees: must offer one hour of paid sick time for every 40 hours worked. Carryover may be limited to 56 hours per year.
  • Employers with more than 249 employees: must offer one hour of paid sick time for every 30 hours worked. Carryover may be limited to 72 hours per year.

Washington D.C. 

The District of Columbia has varying sick time accrual rates depending on staff count:

  • 100 or more employees: no less than one hour of paid sick leave for every 37 hours worked, capped at 7 days per year. 
  • At least 25, but no more than 99 employees: no less than one hour of paid sick leave for every 43 hours worked, capped at 5 days per year. 
  • 24 or fewer employees: no less than one hour of paid sick leave for every 87 hours worked, capped at 3 days per year. 

 

Sick leave rules in cities & counties

The following cities and counties have their own sick leave rules independent of local state laws. If you operate a business in any of these areas, do some further research to see what kind of sick leave you owe your staff, if any. 

  • San Francisco
  • Oakland
  • Emeryville
  • Santa Monica
  • Los Angeles
  • Seattle
  • Portland
  • San Diego
  • Berkeley
  • Seattle
  • Tacoma
  • New York City
  • Westchester County
  • Philadelphia
  • Pittsburgh
  • Allegheny County
  • Montgomery County
  • Minneapolis
  • Chicago
  • Cook County 

Building your own paid sick leave policy

When creating your own sick leave policy, you want to offer your employees the flexibility they need to take time off when they need it. At the same time, you need to set up clear rules and procedures for doing so to avoid abuse, error, and unnecessary administrative work for your staff. 

Your policy should outline the rules and procedures behind requesting time off as well as a strategy for keeping track of employee accrual and how many sick days they have used. 

  • Set the rules for who is eligible for paid sick leave, the structure of your paid sick leave (accrual, lump sum, or unlimited), and any local laws that automatically apply to your policy. 
  • Design a procedure for requesting and taking time off. This should include the number of days’ notice required for planned sick leave, who they need to request sick leave from, what information they need to provide, and through which platform. 
  • Develop a strategy for recordkeeping that allows you to monitor how much leave has been taken, store any relevant documents, and avoid abuse. 
  • Automatically track accruals with software so that you aren’t burdening your HR team with tedious administrative tasks. Look into ways to have it so that sick leave is accrued, requested, recorded, and paid in the background with minimal need for calculation and data entry. 

Manage sick leave requests and stay compliant with Workforce.com

Once you have developed your paid sick leave policy, you need an employee scheduling, paid time off tracker, and payroll solution that streamlines the procedure of managing sick leave, keeps error-free records, calculates accurate pay and does all of this in line with state and local laws. 

Managing sick leave should be as simple as “set it and forget it.” Get in touch with us today to find out how Workforce.com can help you easily and automatically comply with your state’s sick leave standards. 

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.

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What is time and a half pay + how to calculate it

Summary:

  • Under the FLSA, time and a half is the rate at which non-exempt employees earn overtime for every hour worked beyond 40 in a week.

  • Calculate time and a half pay by multiplying an employee’s regular pay rate by a factor of 1.5 for every hour of overtime. However, the steps may differ depending on whether the employee is hourly or salaried, or if bonuses are included in their pay.

  • With HR and payroll software, employers can calculate time and a half pay automatically.

Understanding time and a half or overtime pay is essential if you employ non-exempt workers. While it might sound straightforward (extra pay for extra hours), FLSA rules and varying state laws can make it complicated. Mistakes in calculating overtime pay and identifying who qualifies can lead to non-compliance and penalties. This guide breaks down what time and a half is, how to calculate it, and how to stay compliant.

What is time and a half and how does it work?

Time and a half pay refers to the overtime pay that non-exempt employees are entitled to when they work for more than 40 hours a week, as mandated by the Fair Labor Standards Act (FLSA). It’s called time and a half pay because it’s equivalent to an employee’s hourly rate multiplied by 1.5 per hour of overtime.

Who qualifies for time and a half?

According to the FLSA , some employees are exempt from time and a half pay, while others are non-exempt. Exemption and non-exemption are driven by factors such as wages and the job duties performed.  So what makes an employee exempt from receiving time and a half pay?

As a general rule of thumb, most salaried employees are exempt from time and a half pay if they earn more than $844 in weekly pay or $43,888 in annual salary. This threshold took effect on July 1, 2024. Previously, the weekly wage limit was only $684. On January 1, 2025, the threshold will go up to $1,128 per week or $58,656 per year, and beginning July 1, 2027, these limits will be updated every three years, according to the US Department of Labor’s new ruling.

This means that hourly employees working standard 40-hour workweeks in the usual frontline industries (retail, hospitality, healthcare, etc.) are non-exempt and must receive time and a half pay if they go into overtime.

To know more about what makes an employee exempt or non-exempt, read this guide.

How to calculate time and a half pay

When calculating overtime pay for non-exempt employees , you need to understand how to do it for hourly and salaried workers. Hourly workers may take up the lion’s share of non-exempt workers entitled to time and a half pay , but it’s also vital to know how to calculate overtime pay for non-exempt salaried employees.

Calculating time and a half pay for hourly workers

Calculating time and a half for hourly workers is fairly straightforward because you’re already aware of their hourly rate . To compute overtime pay , look at this example and follow these steps. 

Say, Dave is an hourly worker who earns $13 per hour. For this week, Dave has worked a total of 50 hours. How much do you need to pay him, including overtime?  

1. First, you need to get the total regular wages for the week. Multiply the employee’s regular rate by 40 hours.

$13 x 40 hours = $520 in regular wages

2. To get the hourly time and a half rate, multiply the regular hourly wage by 1.5.

$13 x 1.5 = $19.5 per hour of overtime

3. Multiply the hourly overtime pay by the number of overtime hours rendered.

$19.5 x 10 = $195 of overtime pay

4. Add both regular and overtime wages. 

$520 + $195 = $715In this example, Dave should receive a gross pay amounting to $715, which accounted for regular 40 hours and 10 hours of overtime worked.

Calculating time and a half pay for salaried employees

Calculating time and a half pay for salaried employees requires an extra step to get the hourly pay rate because they are paid a fixed wage. 

For instance, Lisa earns a fixed weekly salary of $750, and she’s expected to work 36 hours. But for this week, she has worked a total of 48 hours. Here’s how you can compute her overtime pay.  

1. Find the regular hourly rate by dividing the fixed weekly salary by the employee’s fixed hours. 

$750 / 36 hours = $20.83 per hour of regular work

2. Calculate the employee’s total regular wages. 

$20.83 x 40 hours = $833.20

3. Multiply the regular hourly rate by 1.5 to get the time and a half pay rate.

$20.83 x 1.5 = $31.25 per overtime hour

4. Calculate the total overtime wages

$31.25 × 8 = $250.00

5. Add regular and overtime wages.

$833.20 (regular wages) + $250.00 (overtime wages) = $1,083.20

In this example, Lisa needs to get a total of $1,083.20 in wages that includes both regular wages and time and a half pay for 8 hours of overtime work. 

FLSA typically uses a 40-hour work week for overtime calculations, but companies can choose to pay overtime based on the weekly work hours agreed upon. For instance, Lisa’s employers can choose to start paying her overtime once she exceeds 36 hours, provided that there’s a specific company policy that states so.

Calculating time and a half pay with bonuses

Nondiscretionary bonuses should be included in the calculation of time and a half pay. Here’s an example of how you can compute the overtime pay with a bonus. 

For example, John earns $12 an hour, worked 48 hours this week, and received a bonus of $20 for perfect attendance. Here’s how to compute his regular pay and time and a half pay that accounts for that bonus. 

1. Calculate the straight-time earnings for the week by adding the total number of hours. 

$12 x 48 hours = $576

2. Add the nondiscretionary bonus. 

Total earnings (before overtime adjustment) = $576 + $20 = $596.

3. Calculate the new regular hourly rate based on the straight-time earnings for the week. 

$596 / 48 hours = $12.42 standard hourly rate

4. Multiply the new regular hourly rate by 40 to get the regular wages for the week. 

$12.42 x 40 = $496.8

5. Calculate the hourly overtime rate by multiplying the standard hourly rate by 1.5.

$12.42 x 1.5 = $18.63 per hour of overtime

6. Multiply the hourly overtime rate by overtime hours worked. 

$18.63 × 8  = $149.04

7. Add together the regular and overtime wages to determine total pay.

$496.80 (regular wages) + $149.04 (overtime pay) = $645.84.

In this example, John should receive $645.84 in total wages, which accounts for the attendance bonus he was entitled to. 

Nondiscretionary bonuses must be included in regular rate calculations. Additionally, the example assumes the $20 bonus applies to this specific week only. If it covered a longer period, the bonus would need to be allocated across those weeks to calculate an accurate weekly regular rate.

Human resources or payroll officers must first determine the period that the bonus covers and it should be accounted for according to that timeframe.

Common challenges when calculating time and a half pay

Calculating time and a half pay sounds simple on paper, but when accounting for federal and state rules, things can get tricky fast. While the overtime rate of 1.5 is straightforward, it’s easy to miscalculate.  Here are some of the common challenges when calculating overtime pay:

Classifying employees correctly

It’s always a question of whether an employee is exempt or non-exempt from FLSA and time and a half pay. Given the typical nature of their work, it’s easy to assume that only hourly employees are non-exempt, but it’s not as clear-cut as that. 

Remember that eligibility for time and a half pay is determined by the wages earned and the nature of the job’s tasks. Even salaried employees can be eligible for overtime, making it crucial to understand the rules and exemptions on the state and federal levels.

Understanding specific state laws

The minimum wage is $7.25 per hour for nonexempt employees under the federal law. However, state-based thresholds can vary quite a bit. For instance, the minimum wage in California is $16, and New York’s is $15. Meanwhile, states like North Carolina and New Hampshire have the same minimum wage as the federal government. 

The fluctuating workweek method also seems like an appealing way to lower overtime costs. However, it has many legal nuances and can be prone to calculation errors. Some states even prohibit it, such as California. 

Companies need to have a firm grasp of both federal and state requirements. In the case of calculating time and a half pay, the higher minimum wage or the rule that would benefit the employee should be applied. 

Accounting for differing pay rates between teams/shifts

Obviously, time and a half pay must be based on accurate pay rates in the first place – this is easier said than done, especially for employees who might receive varying pay rates. With this in mind, you’ll need to calculate time and a half pay rates according to the correct rates for every employee, no matter the team, shift, or role they work in.

Excluding nondiscretionary bonuses in the regular rate of pay

Bonuses, especially those that FLSA considered non-discretionary, should be included in the computation of the regular rate of pay. 

Nondiscretionary bonuses are predetermined in nature, such as attendance bonuses or bonuses for quality of work. Even if the employer has the option not to award the bonuses, it doesn’t mean that these incentives are discretionary. It’s nondiscretionary in nature because the employees are aware of the bonus and have an expectation of how and when they will receive it. 

Automate time and a half computations with Workforce.com

Calculating time and a half pay is not a walk in the park, and it can be daunting to understand the exemptions and rules under the FLSA and state-specific regulations. However, a payroll system like Workforce.com can help alleviate most of the uncertainty that comes with time and a half calculations. Here’s how:

Detailed onboarding checklists

Getting time and a half right starts before payroll even comes into play. It begins with employee classification and accurate pay setup. Workforce.com’s onboarding system ensures that each employee’s classification and pay rates are set up correctly from day one. Plus, it streamlines paperwork like signing contracts, filing W-4s, and submitting employee personal details. 

Accurate time and attendance tracking

When timesheets are accurate, it’s easier to compute wages for employees who work overtime; Workforce.com delivers this and more. As employees clock in and out via kiosk or mobile device, the system automatically generates digital timesheets containing regular hours and overtime hours .

Automated labor compliance

Workforce.com is built with a robust compliance engine that helps you pay staff in accordance with labor laws. In addition to calculating total hours worked and overtime pay, it automatically alerts you to potential conflicts with overtime laws, maximum-hour rules, and fair workweek regulations.

Real-time wage tracking

Workforce.com gives you complete insight into your operations. For example, a robust reporting suite lets you pull reports on daily labor spend across every team and location, letting you easily pinpoint where and when overtime hours occur. 

Alternative rate calculations

Aside from an employee’s regular pay rate, managers can assign alternative rates to teams or shifts on Workforce.com to help manage staff who work multiple roles. Whenever an employee works a specific role, the corresponding “team tag” automatically applies. This setup makes it easy to calculate time and a half pay even when juggling multiple pay rates for every employee. 

Powerful payroll

Because Workforce.com’s payroll system is housed in the same system as onboarding, time and attendance tracking, and employee scheduling, wage and overtime calculations become faster and more precise. With data synchronized across modules, there’s no need for duplicate profiles or manual re-entry. As a result, employees receive accurate paychecks every time.  

One of the best ways to avoid issues with time and a half is to never have to pay it in the first place. Check out our free webinar below to see what you might be missing when it comes to paying out excessive overtime.

Webinar: How to lower your overtime hours

If you want to learn more about how Workforce.com can help you manage your workforce while staying compliant with the FLSA and state-specific laws, book a call today.

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Webinar: How Tech Can Stop Turnover for Small HR Teams

Smaller HR teams are facing challenges in maintaining employee loyalty due to being overwhelmed with various responsibilities.

It’s understandable that focusing on employee engagement can be difficult in such circumstances. However, utilizing technology can be a game-changer for lone HR managers looking to enhance employee loyalty.

This webinar aims to address these challenges by offering insights into leveraging technology solutions. By exploring both free and investment-worthy options, HR pros can learn how to create compelling job descriptions, cultivate loyalty beyond competitive compensation, and leverage the unique dynamics of small companies.

We brought on Retensa’s CEO, Chason Hecht, as well as talent specialist & Director of Employee Experience, Dana Small, to discuss free and premium tech tools that HR can use to offload nearly 30% of their admin work.

Check out the list below as well as the full webinar here:

12 free & investment-worthy tools to…

Streamline the Hiring Process:

1. ONET.com: This occupation keyword search directory allows recruiters to quickly identify and match job descriptions with relevant skills and competencies. It helps create accurate job postings and ensures candidates’ qualifications align with job requirements, speeding up the screening process.

2. Applicant Tracking System: An ATS automates the recruitment process by managing job applications, screening resumes, and tracking candidates throughout the hiring pipeline. It reduces manual tasks, ensures compliance, and helps prioritize top candidates, making the hiring process faster and more efficient.

3. Applicantstack.com: ATS platform that streamlines recruitment by automating job posting, resume management, and candidate communication. It helps organize and track applicants, reducing the time spent on administrative tasks and improving the efficiency of the hiring process. If you have a few positions open it costs less than $50 a month. If you hire more, unlimited jobs for $100 a month. You can also leverage it for onboarding if your budget is higher.

4. Claude AI: Assist with candidate screening by conducting preliminary interviews, answering candidate questions, and gathering necessary information. This reduces the time spent by human recruiters on initial interactions, allowing them to focus on qualified candidates. Also, this tool reduces your hiring data into interactive, understandable visuals. Leverage this to summarize the candidate pipeline.

Enhance Onboarding:

5. MS Planner: A simple but capable project management tool that can be customized for onboarding. It allows HR teams to create visual boards with tasks, checklists, and timelines for new hires. Free with Office 365.

6.  Loom: Allows you to create video tutorials and walkthroughs that can be shared with new hires. This is especially useful for remote onboarding, where face-to-face interaction is limited.

7. Free Fuse: Free Fuse offers a tool to build interactive learning trees that can be used to train and onboard candidates faster. By using this tool, employers can provide potential hires with bitesize information, assessments or onboarding materials, automating the learning process based on their learning pace and performance. Fully functional basic package is free.

8.  Leverage Learning Management Systems (LMS): Libraries of courses and topics for technical and soft skill development.

Create a Retention Environment:

9. TalentPulse: A turnkey employee feedback platform that captures real-time insights at every stage of the employee lifecycle. Automates and reports on employee sentiment through questions, surveys and 360’s, helping organizations identify real-world issues to better engage and inspire the workforce. Any 1 of 24 surveys can be sent for free up to 5 responses.

10. Flexible Scheduling: Schedule staff in minutes & reduce labor costs 11%

  • Create fast and accurate schedules with templates,
  • staffing ratios, and shift swapping.

Lower Turnover Rates:

11. ExitPro: Provides secure and streamlined Exit Interview program in minutes. With several pre-built exit interview question templates, instant exit interview reports, and a suite of tools to predict and prevent employee turnover. A Free trial can last up to 12 months and unlimited exit interviews for as little as $79/month.

12. Notion AI: Notion AI is an advanced feature within the Notion platform that leverages artificial intelligence to enhance productivity and organization. For employee retention, Notion AI can assist in creating personalized onboarding experiences, maintaining detailed employee records, and automating repetitive tasks

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11 HR Basics for Small Businesses

Summary:

  • Statistics show that small businesses employ 61.6 million people in the United States, almost half (45.9%) of the US workforce.
  • With lean HR teams, small businesses must learn how to properly prioritize HR-related tasks.
  • Human resource management has many areas, and technology can simplify it for small businesses. Workforce.com is a best-in-class platform that helps small businesses with employee relations, labor compliance, payroll, and more.

Small business owners wear many hats—manager, marketer, strategist, and sometimes even accountant. However, one of the most crucial roles you play is that of a human resources (HR) manager.

While your business may be small, it’s vital to establish solid HR practices. From hiring your first employee to managing a growing team, understanding HR basics is key to fostering a positive company culture and ensuring legal compliance. 

Whether you’re personally handling HR tasks or entrusting them to someone on your team, here are 11 HR basics to focus on for your small business.

1. Labor compliance

Regardless of size, businesses are governed by labor laws under the local, state, and federal governments. This includes rules around employee classification, minimum wage, overtime, anti-discrimination, and workplace safety. 

As a small business, it’s vital to familiarize yourself with applicable employment laws to remain compliant and ensure that your policies are aligned with labor rules. Furthermore, some rules may differ for small businesses and large corporations, so constantly checking and verifying is best. 

For instance, in Massachusetts, businesses with 11 or more employees must provide paid sick leave, while those with fewer than 11 employees are only required to provide unpaid sick leave. 

If you have doubts about the proper protocol for employing someone, you should always consult your state’s Department of Labor.

2. Employee handbook

An employee handbook is more than just an administrative document; it’s a vital tool that sets clear expectations, promotes consistency, and protects your business and employees. But most importantly, from an employer’s perspective, a handbook helps defend against employee lawsuits. Small businesses must prioritize having a well-crafted handbook from the start. 

An employee handbook provides a foundation for a cohesive workplace, ensuring everyone is aligned with company policies and procedures. Sure, employees may memorize only some of the policies in one sitting, but it pays to have this document readily available so they have something to refer back to. It’s vital for clarifying HR policies, work hours, code of conduct, benefits, leave policies, disciplinary procedures, termination process, separation agreements, and emergency procedures. 

Creating a thorough and compliant handbook is a must to prove your business exercises “reasonable care” towards staff. Don’t skip it; otherwise, you will most likely be in for a world of hurt in the future.

3. Job descriptions

Small businesses also need to have job descriptions for every position. And no, I do not mean job postings. I mean job descriptions. These are internal documents that outline critical responsibilities, required skills, expectations, and qualifications for each role in your company.

Referring to job descriptions is extremely useful for things like performance management, promotion, hiring, and terminations.Writing multiple job descriptions may be daunting and time-consuming, especially if you don’t have any in place and are trying to catch up. To help you get started, here are customizable job description templates that you can use.

4. Recruitment

A core area of HR is recruitment. Hiring employees is difficult, especially if you’re just now beginning to build your workforce.

Small businesses should create a recruitment process that outlines job postings, interviews, and background checks. Remember that HR is typically the first point of contact for potential hires, so ensure that you have a straightforward process of how recruitment will go. In addition, see to it that you’re not violating any anti-discriminatory laws.

5. Onboarding

Another vital part of HR is onboarding. A crucial step in this stage is gathering all necessary information and paperwork from an incoming team member. These include employee classification, W-4 and I-9 forms, social security numbers, bank details, marital status, and e-signatures.

Onboarding also integrates new hires into the company. An onboarding plan or roadmap should include steps that cover policies and procedures, training, company culture, and what’s expected of a new employee within the first week, first month, first 60 days, and so on.

Also read: Creating a Better Onboarding Process for Hourly Staff

6. Time and attendance tracking

Time tracking is the backbone of paying your employees correctly. Establish a process for capturing this information to ensure accuracy. Aside from employee time punches and overtime, you must also monitor your staff’s time off and leave balances.

There are several ways to track employee work hours. You can opt for paper timesheets, which are physical records of clock-ins and clock-outs. While simple to use, these are easily tampered with and time-consuming to verify. You can also use punch cards. While more straightforward to implement than paper timesheets, punch cards require clunky time clock machines – prone to mechanical failure and susceptible to buddy punching.

Cloud-based software is another option to track employee time. It can be automated and used across devices like cell phones, tablets, and desktop computers. Software like this typically has additional features to verify timesheets and prevent time theft. Whatever method you choose, go for one that will help you streamline the process of timesheet approvals; this is an area that can take up a lot of your HR admin time.

7. Employee scheduling

Employee scheduling is another significant part of running a business, big or small. While not typically a function of HR, in a small business the HR manager or owner typically will find themselves involved in creating and managing shift schedules.

Scheduling may seem straightforward, but it goes beyond setting and assigning shifts to staff. It is the art of balancing demand versus the number of employees you need to schedule. This is especially true for hourly workforces in the hospitality, restaurant, and retail industries.

Furthermore, you also need a process for when an employee can’t make it to work at the last minute. How do you find available qualified staff? It pays to have a set of steps to follow in such situations so you don’t end up short of people.

8. Payroll

Running payroll involves computing and distributing employee wages and salaries. Typically, you can run payroll yourself with the help of software, or outsource the work to a payroll service company. If you choose to calculate payroll yourself, you’ll need to track hours worked, employee classifications, applicable overtime, tax withholdings, benefits, and deductions. A lot goes into every pay run, and it can be more complex when you have hourly workers. 

Here are some of the basics you’ll need to start running payroll:

  1. Employer Identification Number
  2. W-4 Forms
  3. I-9 Forms
  4. State tax withholding forms
  5. Direct deposit authorization forms

You also need to establish a payment schedule. Payroll can be released weekly, bi-weekly, semi-monthly, or monthly. To determine which makes the most sense for you, consider business needs, cash flow, industry practices, and state laws or payday requirements.

9. Performance management and feedback

HR departments, whether in a small company or a big corporation, must implement a system for regular employee performance reviews. This is to retain top talent, boost employee engagement, and identify areas where more training may be needed. You must ensure that staff are on the right track and know the value they bring to the organization. When your employees are thriving, so does your business. It also pays to have a program for recognition and rewards to maintain morale and keep your team motivated. 

Performance reviews are not always formal sit-down meetings every month or quarter. In fact, it can be more spontaneous and informal. Coaching can be more in the moment, especially when your managers are on the floor with the team. 

Gathering employee feedback is also an important part of this. Setting up a system where staff can tell you what’s working and what needs to improve is advisable. Use the feedback to optimize your operations and spot potential problems. 

10. Employee development and training

Training and development is an excellent followthrough to your feedback process. Provide training opportunities to help employees develop their skills and advance their careers. This is a good step in preparing them for a more significant role. In some cases, though, additional training is conducted to bridge a gap and bring employees to where they currently are to where you want them to perform. 

It’s also vital to conduct compliance training. Ensure employees receive mandatory training, such as sexual harassment prevention or safety training.

11. Recordkeeping

HR is also responsible for maintaining accurate and confidential employee records such as personal information, performance evaluations, and disciplinary actions. They must also secure compliance documentation and compliance records, such as employment eligibility and payroll records. 

Why is HR important for small businesses?

Small businesses must prioritize HR because it’s the backbone of any operation. Whether you have a dedicated team or just one person to oversee it, you must perform HR responsibilities. You need to be compliant, hire for essential roles, retain top talent, and pay employees correctly to succeed.

While there may be some differences between laws for small businesses and big corporations, the fact remains that HR-related responsibilities exist for both. 

As a small business, prioritizing HR this early gives you an advantage because you can set the tone early and ensure your business is on the right track. It may require a lot of hard work now, but instilling these habits and processes early on will make it easier for you as your business grows.

The benefits of HR software for small businesses

Properly managing the full scope of HR is a daunting prospect for a small business. Typically, HR takes a backseat to more functional duties that keep a business running on a daily basis. However, by using software to shoulder some of the responsibilities of HR, smaller businesses can successfully set up a strong foundation and push through some key initiatives.

Here are the benefits of HR technology and why investing in it is a wise investment for small businesses.

Time and cost

HR management takes time, and software can significantly reduce time spent on manual and administrative tasks such as payroll, time and attendance tracking, and benefits administration. Having a cloud-based system in place frees up time for small business owners or HR staff to focus on strategic tasks. Furthermore, it reduces administrative costs related to paperwork and long hours spent on manual processes.

Improved compliance

HR software helps keep your compliance more airtight. Since it automates most of the processes, you can rest assured that you’re keeping a record of every vital information related to compliance and audits. It also helps track deadlines for compliance-related tasks and provides reminders for legal requirements such as employee eligibility verification and OSHA reporting.

Accuracy

Because HR software keeps employee data centralized. Since it is a single platform to store and manage all employee information, it’s simple and quick to update records, manage benefits, process payroll, and optimize employee schedules. 

HR software simplifies benefits enrollment by providing a user-friendly platform for employees to select and manage their benefits, reducing the administrative workload and improving accuracy. 

It also ensures that all time and attendance records are accurate, making timesheets easier to process every pay period.

Simplified processes

HR is rife with many administrative processes, and if you do them manually, you can quickly find yourself buried in paperwork, tracking employee information, and sifting through legal rules. HR software can simplify all of that for you. 

It can help you automate and standardize onboarding, benefits enrollment and management, time and attendance tracking, payroll processing, compliance, and even some areas of performance management. 

Because HR technology streamlines much of the administrative work, you can focus on making more strategic decisions, such as improving employee benefits package, optimizing schedules according to demand, addressing workplace conflict, and taking action on employee feedback.

Employee self-service and transparency

Employee self-service is another core capability of good HR software. It lets your employees check their schedules, view their leave balances, check their benefits, and update their information. 

Employee self-service capability should begin with onboarding, where new hires can upload their information and necessary documents to your systems. As a result, you avoid double entries, minimize errors, and spend less time on admin. 

Self-service portals often allow employees to update their personal information, view pay stubs, request time off, and access the employee handbook and company policies.

Data-driven decision making

HR software equips managers with better scheduling and workforce planning. An HR software that tracks demand can quickly provide insights into how to create more profitable shifts, ensuring that you’re not over or understaffing. It can also help you determine whether to hire more people or optimize your team’s hours.

Through analytics and reporting features, you can also create strategic moves by tracking turnover rates, employee sentiment and satisfaction, and recruitment efficiency.

Workforce.com simplifies HR for small businesses

Workforce.com understands the ins and outs of running a small business, especially those employing hourly workers. Whether a small business owner or a single team member tasked with HR duties, Workforce.com can be your HR sidekick.

Workforce.com is an all-in-one platform that handles HR, scheduling, and payroll in one single platform. It encompasses all areas of the employee lifecycle, from recruitment to offboarding. Ready to meet your HR assistant? Book a demo to see Workforce.com in action. 

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How to Terminate an Employee: Essential Dos and Don’ts

Summary:

  • Employee termination is a delicate art of upholding company policies and maintaining a good relationship with employees leaving the company. When handled wrong, it can result in legal repercussions.
  • Having a policy for how to terminate employees is vital. But knowing when to do it is equally crucial.
  • Use an official Employee Termination Letter when letting someone go. Also, be sure to properly document performance records and calculate final paychecks in your HR & Payroll system.

Terminating an employee is a challenging yet sensitive process for managers and business owners. It requires a balance of empathy, professionalism, and strict adherence to legal and organizational policies. When handled correctly, it can protect the company’s reputation, maintain team morale, and uphold the dignity of the departing employee. On the other hand, mishandling employee termination can lead to legal repercussions, a toxic work environment, and damage to company culture. 

Here’s a rundown of best practices on what you must do and mistakes to avoid to ensure that your employee termination process is carried out with fairness, compassion, and respect for all parties involved. 

The Dos

Do follow company policy and legal requirements. 

Every organization should have a policy regarding employee terminations. This policy goes beyond a list of paperwork and items that employees need to return before they leave. With this in place, you would have a clear framework and set of steps to follow when letting go of an employee. 

There are several reasons why employees need to be let go, and your termination policy should clearly outline a process for when such conditions are met. Employment typically ends for the following reasons: 

  • Voluntary termination happens when employees decide to leave an organization. Once an employee turns in their resignation or notice, the turnover period usually lasts two weeks to a month, depending on what’s stated in your company policies or what you have discussed with the employee.

The steps for when an employee resigns are pretty straightforward. They will be given a list of things they need to return and informed of when they can receive their final paycheck.

  • Involuntary termination happens when the employer initiates it, and there are several reasons why employers can do so. First, companies experience changes that prompt them to downsize, let go of redundant roles, lay off employees, implement furloughs, or close the business completely. Second, employees fail to perform or commit major violations or offenses.  

Involuntary termination is more challenging to navigate because more legalities must be accounted for. For instance, is the employee given ample opportunity to improve if the termination is due to poor performance? Was the issue communicated clearly to them? You may be liable under the law if you answer no to both questions. 

Your termination policy should clearly state offboarding processes specific to the nature of the termination. More importantly, every rule should adhere to applicable labor laws to avoid non-compliance and potential lawsuits.

For instance, there are employment laws governing when final paychecks should be released. Depending on what states you operate in, you would need to release the final paycheck on the actual last day, the next scheduled payday, or a specific number of days after the termination of employment. Here’s an updated guide on severance pay and final pay rules for 2024. 

Lastly, this policy should be included in the employee handbook.

Do comply with all applicable termination laws.

The dismissal process is straightforward if an employee leaves your company on their own accord. All you need to do is determine their last working day, prepare the necessary paperwork, provide a list of things and responsibilities the departing employee needs to turn over and issue the final pay. 

However, if an employee needs to go for involuntary reasons, you must take additional steps to ensure a smooth and compliant transition. Get thorough legal counsel to ensure that you comply with all termination laws that apply to your business. In particular, ensure you are following your state’s final paycheck regulations. 

Do document everything

Prepare the necessary documentation ahead of time. While nearly every state in the US adheres to the employment-at-will doctrine, it’s good practice to have a paper trail of performance evaluations and disciplinary records that support your reasoning for terminating an employee. You should also create a termination letter, an official document to notify employees that they are being let go. It must include the reason for termination, effective date, and next steps, such as turning over company assets and releasing final pay.

Termination letters may seem straightforward, but you must be careful when writing them. As an official document, they should stand in court if needed. Ensure that they are factual and include all the necessary information. Here’s a free template and guide to writing employee termination letters.

In addition to the termination letter, it is good to prepare and refer to employment contracts and other vital data that will help the employees understand why they are being let go. If you offer a severance package, discuss what’s included and how it will be computed.

Do have a termination meeting to notify the employee privately. 

Regardless of the reason, it would be best to notify the employee privately that they are being let go. It’s never easy to receive such news, and doing it in front of others will make it even more painful. 

A face-to-face meeting keeps their dignity intact, especially if they are being let go for job performance issues. 

It is important to keep these meetings short, straightforward, and professional. During the meeting, present them with the facts, such as the reason for the employment termination, what company property they need to return, when they can expect their final pay, and other next steps. End the meeting amicably, wish them well, and thank them for contributing to the company. 

Consider recording the meeting to ensure that all your bases are covered. Be sure to inform the employee beforehand that the meeting will be recorded. 

Do have a witness when notifying employees that they are being terminated. 

Having a third party present during the meeting is another good idea, both for the employee and the manager. 

Typically, the witness is a human resources person. HR professionals are well-versed and have the expertise to handle terminations, and it can help frontline managers carry out an otherwise daunting task. 

Do provide assistance when possible. 

Depending on the termination circumstances, consider offering recommendation letters to terminated employees to help them find new employment. This can be an excellent way to end things amicably, especially for team members who are let go because of downsizing or layoffs.

The Don’ts

Don’t dismiss employees without personally talking to them. 

Firing someone is never easy and typically comes as a blow, especially for unexpected reasons like layoffs or something more sensitive like “for cause” termination. 

While a termination letter is, in principle, a tool to notify employees that they are being let go, it’s not advisable to deliver the news through this channel only. Think of it as documentation that makes everything official and prevents legal repercussions. But at the end of the day, it’s merely that—a formality. 

When letting people go, it’s best to talk to them in person before presenting formal letters and documentation. A face-to-face dialogue helps soften the blow, demonstrates respect, and allows employees to ask questions regarding the termination. 

Don’t terminate employees on a whim. 

Termination should always be the final recourse because firing an employee without due process can have legal consequences. Letting people go should never be a knee-jerk reaction to the first sign of financial challenges, unsatisfactory performance, or conflict with other staff.

If a team member is not performing up to par, consider putting them under a performance improvement plan or PIP. A PIP is a documented program to help underperforming staff members improve. If an employee falls short of the goals set under the PIP, then termination should be considered. Here’s a guide and free template for creating a performance improvement plan. 

Even if an employee violates a company policy, firing them on the first offense is often not wise. Make sure that they are given the chance to correct their behavior and provide warnings accordingly. There should also be ample investigation and facts before letting employees go due to offenses like tardiness or conflict with another co-worker.

Also read: 3 Mistakes with Employee Conflict Resolution – How to Avoid

Don’t overlook the right timing. 

When it comes to employee termination, the when is equally important as the how. 

While it seems there’s never a right time to announce that an employee is being let go, it’s still essential to time it well. In some cases, firing people at the wrong time can even result in legal risks. 

So when is it NOT advisable to terminate an employee? When they are on medical leave. While an employee who’s under FMLA leave is not exempt from termination, you need to tread carefully. Certain conditions need to be met before you can let go of an employee undergoing said leave. Make sure to consult with your legal team to handle it properly. 

Other times when it’s not advisable to fire employees include: 

  • When they are going through difficult challenges, such as getting diagnosed with a severe illness or getting divorced
  • When they are on vacation or about to celebrate their birthday
  • During December or January, when they would be dealing with the holidays and the bills that come with it
  • During Fridays, because employees may have questions or clarifications. If termination is done close to EOD or on the weekend, it’s not helpful to wait through the weekend before they can get answers or details. Doing it during the midweek is the best way to go. 

Timing is crucial because it can result in a legal issue. However, whether there is a legal risk or not, it’s best to terminate employees with as much consideration as possible. Look into how much your operations could allow and time the termination accordingly. Losing a job is the last thing anyone would want. Make it as manageable for your employees as possible. 

Don’t forget to check in with remaining staff members. 

Employee termination can also affect staff who remain with the company. Ensure you check in with current team members to see how they feel about the situation. 

It’s normal for the remaining staff to feel anxious about their employment, especially after layoffs. Schedule a time to sit with them so you can address their concerns. Use this opportunity to gauge your team’s sentiments and take quick action if you think they are likely to disengage and quit. 

After terminations, it’s best to stay transparent with the remaining team. Have an open-door policy and answer their questions honestly. 

Don’t insinuate that the decision is not final. 

Don’t give false hopes when breaking the news to employees. It has to be clear and direct that they are being let go, and nothing can alter that decision. Don’t allow room for any vagueness or misinterpretation, whether verbal or written.

Don’t part ways on a bad note. 

Terminations, for whatever reason, will never be a comfortable discussion. However, it’s always best to part ways amicably with a departing employee. Even if there’s conflict, it’s pointless to rehash the negative things that happened. At this point, it’s best to focus on the positive sides of their tenure with the organization. 

Say goodbye on a positive note, or at the very least on a professional and civil level. If you think that there’s a risk of violence, have someone nearby to assist you, and don’t engage. 

Workforce.com can help lighten the load of employee termination

There are a lot of areas concerning employee termination, and Workforce.com can help simplify them for you.

Employee termination usually requires extensive documentation of time and attendance, performance reviews, payroll details, and other information related to calculating final pay. Workforce.com can help you gather all of this data and streamline the termination process.

Discover more about how Workforce.com can help you. Book a demo today. 

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3 Mistakes with Employee Conflict Resolution – How to Avoid

Summary:

  • 85% of employees report experiencing workplace conflict.
  • Conflict at work results in personal attacks, frequent absences, and even health issues when not handled properly.
  • Conflict resolution takes up valuable time. Have processes and automation in place to handle HR admin work while dealing with workplace issues.  

Workplace conflicts are inevitable to some degree, but mishandling them can lead to more significant problems. Whether it’s personality clashes, differences in work styles, or disagreements over responsibilities, managing these conflicts effectively is crucial for maintaining a healthy company culture and productive work environment.

According to a study by CPP Inc., 85% of employees experience some kind of conflict. When managed right, conflicts can result in a better understanding and working relationship among the employees, fostering a more positive work environment. But when not handled properly, conflict can transform into bigger problems such as personal attacks, frequent absences, and, yes, even health issues. 

Unfortunately, many managers and HR professionals make common mistakes when dealing with employee disputes, often exacerbating the situation rather than resolving it. In this article, we will explore some of the most frequent pitfalls in employee conflict management and provide practical strategies for avoiding them. 

Mistake 1: Sweeping things under the rug

A study by CIPD found that approximately 31% of employees who experienced conflict felt that their concerns were not taken seriously by the person they reported to, and 48% believed that the interests of the other party were given priority over their own. 

Conflicts are typical in the workplace, but like most problems, they’re never really out of sight or out of mind. If anything, unaddressed conflicts can escalate to bigger issues, such as people leaving jobs, reduced productivity, or a full-blown outburst that can compromise safety and operations. So, the best thing is to tackle conflicts head-on. 

How to avoid: 

Unfortunately, managers and team leaders may tend to avoid conflict simply because they don’t know how to deal with it properly. The good news is conflict resolution skills can be developed. Equip your frontline managers with the right tools and training to help them navigate different communication styles and improve their problem-solving skills.

According to the same study from CPP, Inc., 60% of employees didn’t receive basic training on conflict management and resolution. The others who did, on the other hand, said that the training equipped them to manage workplace conflict and reach positive outcomes or solutions. 

Train your managers to identify different types of conflict effectively. More often than not, the root of the problem is something deeper and something that’s not always apparent on the surface. Is the issue rooted around a task, or is the problem more relational? If it’s the latter, conflict typically stems from differences in values and emotions. Emotional intelligence comes in handy in such cases. Train managers to improve or develop how they read emotions, empathize with others, and manage feelings. Active listening and knowing to use neutral language are also vital for managers and HR professionals.

Administrative tools are equally important as conflict management training, enabling managers to spend more time on the frontlines spotting issues and resolving conflict. Software like Workforce.com streamlines and automates HR processes, scheduling, timesheets, and payroll. When frontline managers finish admin tasks quickly, they get more time on the floor with staff, leading to better conflict management. 

Aside from the functionality mentioned above, Workforce.com also has a shift feedback feature that allows employees to rate their shifts. They can also say what was effective and what needs improvement. Using this information, managers and supervisors can help spot potential conflict or have a clearer perspective of what’s causing tension or challenges.

Webinar: How to Design a Retention Strategy for Hourly Staff

Mistake 2: Not communicating the outcome of the investigation

It’s great when employees are given the chance and platform to air their grievances, but that’s just the start. Employers often miss the other important part of conflict management, which is letting all parties involved know the outcome of the investigation and what next steps to take. 

Some team leaders may treat post-conflict procedures as an out-of-sight, out-of-mind matter—this definitely won’t work. Just because time has passed after the initial conflict doesn’t mean that everything should go back to normal. If anything, leaving team members hanging would further fester ill feelings, cause disengagement among staff, and even increase attrition. 

How to avoid:

Establish a process for conflict resolution and stick with it. Designating clear ground rules sets the tone and direction. The clearer the steps, the higher the chances of issues being resolved. It’s also easier to track the case’s progress and determine roadblocks to conflict resolution.

Every organization’s conflict resolution process differs, but here’s a brief framework to help you create yours. 

  • Determine the source of conflict – Gather information. You can begin by getting statements from all involved parties but don’t take anything at face value. Ask the right questions to probe further and determine the root cause of the issue. Watch out for possible indicators to better understand the reason. For instance, is the issue really about a co-worker, or could it be because of another underlying issue rooted in your operations? In addition, you can look at supporting data from your systems if needed, such as performance evaluation or time and attendance data.
  • Define possible solutions – Ask the people involved how they would want to see the issue resolved. Doing so will give you insight into their point of view and what they value most, and that’s key to coming up with the best possible solution that everyone can agree on.
  • Communicate the solution – Once you develop a solution, communicate it — whatever it is. Make sure to explain how the resolution benefits all parties involved and the organization as a whole. The key here is not always to create a perfect situation for everyone but a space where both sides can move forward, agree, and collaborate.
  • Document the process and agreement – Make sure to document the agreement and ask them for steps they would take to avoid the same issue or conflict moving forward. Note that preventive measures ideally must come from all parties involved, including the organization, if need be. If it would result in change in company policies, ensure that it is appropriately communicated to everyone else and reflected in your employee handbook. 

When conflicts arise, staff must see accountability from the parties involved. It’s not about revenge or getting back at the other but about being heard and seeing the company’s rules correctly implemented. 

Furthermore, seeing conflicts resolved and given the proper attention would encourage staff to speak up and provide feedback. Having that culture would be beneficial in terms of improving your operations and employee engagement. 

Mistake 3: Having a reactive approach to managing conflict

In an ideal world, there would be no conflict in the workplace. But we’re not in an ideal world. Conflict will always eventually arise. However, most organizations tend to fall into the trap of taking a reactive approach to conflict or not taking an approach at all. And this is where things can get messy. 

Typically, most organizations’ policies tend to be reactive, which means they only take action once conflict presents itself. While conflict cannot be completely avoided because people are…well… people, having a more active approach to dealing with issues is still key. 

How to avoid: 

Create a work environment that’s less prone to conflict. What does that look like exactly? 

First, you must equip your organization with tools that allow work to be clear. Sure, the job may have nuances, but it’s best to have a system for clearly black-and-white areas. Take, for instance, software like Workforce.com. It helps reduce or avoid disputes around time and attendance, scheduling, PTOs, and payroll because it’s automated. Should there be any concerns, they are easy to clarify or correct since there is only one source of data. 

Furthermore, you need to create a feedback system that helps spot conflicts and prevent them from blowing up. Aside from regularly scheduled check-ins and performance reviews, it also helps to incorporate a more spontaneous feedback process. Workforce.com’s shift rating and feedback can help. Asking people to rate their shifts can be crucial to identifying conflict early on. 

For instance, if consistent feedback or comments about how a certain piece of equipment delays closing time occurs, you can address it before it causes any further tension among staff. Another example would be if you’re getting reports about staff not endorsing properly for the next shift; you can also address it more ahead of time. 

Typically, conflict starts with small things or minor grievances. By creating a working environment where you can identify those triggers, you can manage conflict before it becomes big enough to disrupt your operations. 

Also read: 10 Best Practices for Employee Surveys

Tips to improve your conflict resolution strategy:

Have an open-door policy

Conflict needs to be brought to light before it can be solved. But how would that happen if employees don’t feel safe speaking up?

Staff may refuse to talk about conflict or concerns bothering them because they fear retaliation. In some instances, they don’t know where to begin. Having an open-door policy promotes open communication and a safe space for your employees to come up and talk to you if they’re facing any issues. 

When you implement such a system, ensure staff are aware of it. Reiterate that they can access their superiors if they need to raise concerns. Ensure, as well, that whatever’s discussed will be confidential or only be disclosed to others to the extent necessary to resolve issues. 

Practice active listening

In conflict management, facilitators must know how to listen, not just to respond but to understand. 

Active listening is vital to gathering information for conflict resolution. It takes into account everything being communicated, including nonverbal cues. When you listen actively, you become more conscious not just of the facts being stated but also of the person’s tone and emotions. 

Furthermore, it also pays to ask questions to validate information and recap what was discussed. 

Understand different conflict management styles

People tend to approach conflict in different ways. Here’s a general overview of these styles and why people resort to them. 

  1. Accommodating – This approach means setting aside one’s needs to give way to the other party’s needs and concerns. People tend to lean toward this approach when they want to keep the peace or if they realize they’re at fault and just want to move forward.
  2. Avoiding – As the word suggests, it means to steer clear of conflict. Some people approach conflict this way when they think the issue is trivial or not worth fighting over. Meanwhile, others avoid facing the problem because they need more time or space to think about it.
  3. Compromising – This approach aims to reach a common ground between two conflicting parties. Note that this approach aims to reach a solution that both parties can be okay with but not necessarily fully satisfied with. While it is not the most ideal, reaching a compromise can cause things to move forward, especially when there’s a deadline.
  4. Collaborating – Unlike compromising, collaborating is about reaching a win-win situation for both parties. This approach aims to reach a resolution that both parties can be happy with.
  5. Competing – Unlike accommodating, competing means standing one’s ground and not budging until the issue is resolved how they see fit. This approach is common among people who think that a rule or law was violated or if they believe that they are in the right. 

Understanding conflict resolution approaches is not just about finding the best way to tackle issues as a manager. It’s also a way to gain deeper insight into why employees approach a situation differently. For instance, if you learned of an issue concerning an employee, yet they chose not to report to you, you would want to probe if it’s just a non-issue for them or if they fear resentment.  

Use a system that keeps employee and workforce data accurate

Conflict can stem from workplace disputes around time and attendance, schedules, payroll, PTOs, and other employee information. That’s why it’s best to use a system that records all of this information, giving you a paper trail to refer back on.  

Information and data from a single source can help thwart conflicts or clarify things more easily. 

Don’t fall behind while resolving conflict 

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Work Opportunity Tax Credit (WOTC): How to claim & where to file

oil painting of blue collar workers

Summary:

  • WOTC is a federal tax credit available to organizations that hire marginalized job seekers, like disabled veterans or ex-felons, who traditionally have a difficult time finding employment. 
  • Employers typically receive a maximum tax credit equal to 40% of up to $6,000 of wages paid to a qualified WOTC employee in their first year of employment. WOTC cannot be claimed beyond that first year.
  • To claim WOTC, employers must fill out additional IRS and DOL forms and submit them to their State Workforce Agency
  • Many Payroll & HR Software providers handle WOTC screening and certification requests for employers, making the process of claiming tax credits much easier. 

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that incentivizes employers to hire people who typically face significant barriers to employment. This program typically offers employers between $2,400 – $9,600 per new qualifying hire. According to the U.S. Department of Labor, roughly $1 billion in tax credits are handed out yearly through WOTC. 

To receive the credit, taxable organizations must complete a screening and certification process when hiring potentially eligible staff. If approved, employers then file an additional form with their annual business tax return. Non-taxable organizations can also participate in the program by receiving a credit against their payroll taxes. 

Introduced in 1996 as part of the Small Business Protection Act, the program was recently extended through Dec 31, 2025, largely due to the impact COVID-19 has had on the labor market. Currently, there is a bipartisan push in Congress to make WOTC permanent.

Benefits of the Work Opportunity Tax Credit

The intended goal of WOTC is to benefit both employers and employees alike. Incentivizing the hiring of targeted individuals through tax credits not only reduces costs for employers by decreasing their federal income tax liability, but it also makes it much easier for these individuals to get hired. WOTC also benefits non-taxable employers by allowing them to receive a credit against their share of Social Security taxes.

While the financial boon to employers is obviously a nice benefit, the main purpose of WOTC is really to help individuals who typically have a difficult time finding a job get hired. Over the years, WOTC has helped people like disabled veterans and ex-felons find jobs, re-enter the workforce, and get a fresh start. Not only is WOTC supposed to help these people get hired, but the program also encourages job retention by requiring WOTC-certified new hires to work a minimum of 120 hours before employers can receive the minimum credit. 

Who is eligible? 

The IRS specifies nine “target groups” employers can hire from to receive tax credits. These groups are:

  • Qualified veterans
  • Ex-felons
  • Designated community residents in Empowerment Zones or Rural Renewal Counties
  • Vocational rehabilitation referrals
  • Summer youth employees living in Empowerment Zones
  • Supplemental Nutrition Assistance Program (SNAP) recipients
  • Supplemental Security Income (SSI) recipients
  • Temporary Assistance for Needy Families (TANF) recipients
  • Long-term unemployment recipients designated by a local agency who have been unemployed for at least 27 consecutive weeks

For the most part, employers can only claim tax credits during the first year a person from one of these target groups is employed. The only exception is for TANF recipients, who employers may claim credit during the first two years.

How to claim in 5 steps

The process for claiming the Work Opportunity Tax Credit upon hiring a qulaiifed individual is relatively straightforward, but it does involve multiple steps and additional tax forms. For more information, visit the IRS website. But for now, here is the general timeline:

  1. Screen Applicants: you’ll want to ensure every new hire is screened for WOTC eligibility. Do this by ensuring applicants complete the IRS Form 8850 Pre-Screening Notice on or before the job offer date. You’ll submit this form and a written request to your State Workforce Agency (SWA) to see if an applicant qualifies for the tax credit. Visit the DOL website for a complete list of links to State Workforce Agencies. 
  2. Complete DOL ETA Form 9061 or 9062: The WOTC Individual Characteristics Form should be completed by the new hire as part of their onboarding. Along with this form, the new hire will typically need to provide supporting documentation or forms certifying their status as a member of a targeted group. 
  3. File Documents: Submit Form 8850 and 9061 along with all supporting documentation to your SWA within 28 days of the new hire’s start date. The SWA decides the eligibility of your new hire and can sometimes request additional information before approving your certification request.
  4. Track hours and wages: To claim the minimum tax credit, qualified new hires must work at least 120 hours in their first year of employment. Depending on how many qualified staff an employer has, accurately tracking all of this information can be tedious. To make things easier, use a Time and Attendance system to automatically record hours and wages on electronic timesheets. 
  5. Claim the tax credit: To receive the tax credits, submit IRS Form 5884 when filing your annual tax returns at the end of the year. Tax-exempt organizations will need to submit Form 5884-C. 


If an employer uses an outside consultant, such as a payroll or CPA firm, to sign and file WOTC forms on their behalf, they will also need to complete the Employer Representative Declaration form 9198. This form essentially declares a third party as a legal representative to manage WOTC certification requests.

How is it calculated?

At the end of the year, employers receive a maximum tax credit equal to 40% of up to $6,000 of wages paid to a qualified WOTC employee in their first year of employment. The employee needs to work at least 400 hours for the employer to receive the credit.

If the maximum tax credit above is met, employers typically receive $2,400 in credit per WOTC employee. However, employers may also claim credit on 25% of the first-year wages earned by a qualifying employee who works at least 120 hours.

There are several exceptions to the maximum credit amount of $2,400. Here are the WOTC target groups with different maximum credit amounts:

  • Veterans with service-connected disabilities who have been employed for more than six months – $9,600
  • Long-Term Family Assistance recipients who have received TANF benefits for at least 18 consecutive months – $9,000
  • Summer Youth program participants ages 16 and 17 and live in a designated community area – $1,200

Is WOTC truly a win-win?

The Work Opportunity Tax Credit program has obvious benefits for both employers and individuals in target groups. Over the years, the tax credit incentive has not only saved organizations thousands of dollars every year but also helped marginalized people across the country re-enter the workforce and provide for themselves.

However, there are some question marks regarding the effectiveness of the WOTC program. 

One of the proposed benefits of WOTC is to encourage retention. Unfortunately, meeting the minimum 120 hours for tax credit only equates to roughly three weeks of full-time employment. This low threshold has led to temporary employment agencies taking full advantage of WOTC, hiring cheap labor, getting a tax credit, and then quickly moving on from these workers.

But temp agencies aren’t the only problem. Large, low-wage employers with high turnover also take advantage of WOTC. Investigative journalism outlet ProPublica discovered that Walmart, Dollar General, and Amazon were some of the top recipients of the tax credit in a 2022 analysis. While these large companies are raking in the financial benefits, workers from target groups tend to fall by the wayside, working low-wage, high-stress jobs for a few weeks before getting laid off and starting the whole process over again.

This begs the question: With the government losing out on over $1 billion due to WOTC and temp agencies sometimes earning $114 million over the past ten years in credit, who is truly benefitting here? Without WOTC, what could the government spend its money on instead to help marginalized Americans? 

The outlook for WOTC is still uncertain. As of now, it is set to end after 2025. But, if it is either renewed or made permanent, perhaps a reassessment of who benefits from this program the most is in order. 

In the meantime, smaller employers would do well to make the most of this tax credit while also taking genuine steps to retain WOTC-qualified new hires for the long term. In most situations, WOTC is a win-win for employers and job seekers, and the program’s effect is most likely a net positive for the job market, even with a few bad actors tainting the program.

Claiming WOTC through Workforce.com

Properly screening new applicants for WOTC can be time-consuming and overburden your HR team. Not only does it prolong the hiring process, but it also opens the door to all kinds of mistakes if either a new hire or HR team member fills out a WOTC application form incorrectly.

If your organization wants to qualify for tax credits but doesn’t want to deal with the hassle, find a payroll system that does all of the work for you. 

Workforce.com features an easy-to-use WOTC screening service that allows new job applicants to check a few boxes to determine their eligibility. Using this information, Workforce.com fills out both forms 9061 and 8850 for you and sends them to your SWA for approval. Once approved, you can track all wages and hours worked through Workforce.com’s Time & Attendance system. At the end of each pay cycle, these hours are automatically reported for your organization so that you’ll receive the tax credit at the end of the year.

To learn more about claiming WOTC through Workforce.com, please reach out. We’d be happy to talk!